Thoughts on economics and liberty

An email sent to Liam Mannix by a reader re: his CRAZY WRONG article, “lockdowns are a ‘no brainer'”

This article by Liam is as mad as any that you can get: Numbers show lockdowns are a ‘no brainer’. Letting people die isn’t

Liam did not respond to a reader who sent him the following email:

====EMAIL SENT TO HIM BY A READER==

Hi Liam

I just finished reading your article Numbers show lockdowns are a ‘no brainer’. Letting people die isn’t which raised a couple of questions – I was hoping you could shed some light.

https://www.theage.com.au/national/numbers-show-lockdowns-are-a-no-brainer-letting-people-die-isn-t-20200922-p55y3z.html

1. The virus does seem to pose long-term health risks to even the young and healthy, but we won’t truly know what those are for years.

The CDC estimates the virus has an infection fatality ratio in the US of 0.02% (1 in 5,000) for those aged 20 – 49 and 0.003% (1 in 33,000) for those aged 0 – 19.  We also know that most people dying with the virus have chronic health issues.

https://www.cdc.gov/coronavirus/2019-ncov/hcp/planning-scenarios.html

It is clear that people aged under 50 have close to zero chance of dying with the virus (let alone because of it) so I would be surprised if it posed long term health risks to people in this demographic.  If you could send through evidence supporting your finding it would be greatly appreciated.

  1. Their model compared the cost of no lockdown with a hard, early lockdown.  Economically, a hard eight-week lockdown brings a $51.98 billion hit to the economy, plus extra costs as the economy returns to normal.

The modellers do not mention any increase in government debt resulting from the lockdown measures.  The Parliamentary Budget Office estimates this will be around $500 billion to $620 billion over the next decade at a federal level.  This does not include any increase in state debts or take into account all the businesses and jobs destroyed as a result of the lockdowns (many will never recover).

It is important to take into account the significant increase in government debt which will need to be repaid by future generations.  This will result in them having to accept a lower standard of government services such as education and healthcare for decades to come for a virus which poses little if not zero risk to them.

https://www.afr.com/policy/economy/virus-blows-out-debt-by-more-than-500b-20200605-p54zrp

In addition, the modellers have assumed an 8 week lockdown whereas Victoria has been locked down for 7 months and counting.

2. The model assigns a value of $4.9 million to a full life – a figure estimated by Australian government bureaucrats using surveys on how much people are willing to pay to cut their risk of death or injury. Lives over the age of 70 are discounted by 30 per cent.

The average age of those dying with the virus is around 85 in Australia – the vast majority are in nursing homes and have chronic health issues.  It is worth noting that most residents entering aged care will die within 3 years. In addition, the life expectancy of a child born today is around 82 which is younger than the average age of those dying with Covid.

I have no objection to the $4.9 million figure used for a full life value as this aligns with the life expectancy of a child born today and the value our government assigns to a single year of life.  However I was shocked to read that the modellers discounted the value of life for anyone over 70 by just 30% as compared to a healthy child who has their whole life ahead of them.

In my opinion it makes much more sense to put a value on each year of life.  Let’s split the difference on the $50,000 – $85,000 range you quoted and make it $70,000 per year.  This is a simple figure which assumes the value of a year of life is the same for the old and sick as compared with the young and healthy.

3. Using that number, a no-lockdown strategy would lead to the deaths of between 18,000 and 25,000 people.

If you apply the death rate of Sweden (which mismanaged aged care early on) to the population of Australia, you would get to around 14,500 deaths.  Given they did apply some minor lockdown measures, let’s assume the lower rate of 18,000 lives saved compared with no lockdown measures.

This figure does not include additional deaths (for example delayed diagnosis) or significant mental health issues resulting from the lockdown measures.

4. Translate that into a cost per life and you get between $62 billion and $86 billion.

Even if you take these figures face value, the value of life saved is much lower than the cost to the federal government as highlighted above ($500 – $620 billion cost versus $62 – $86 billion benefit).

However I suggest another approach to the cost benefit equation where 18,000 people (majority in aged care) have their lives extended by a conservative figure – say 3 years.  That would result in a total of 54,000 years of life saved for these people (the benefit).

So what is the cost of each year of life saved?  Divide $500 – $620 billion by 54,000 to get to about $9 – $11 million per year.  Big numbers indeed – and about 150 times the $70,000 level accepted by the federal government.  Another way to look at it; one year of life saved from Covid costs twice as much as the $4.9 million value assigned to a full life.  This does not include a range of other costs such as increased state debt, destruction of small business and jobs, health issues resulting from delayed medical diagnosis, increased mental health issues and general loss of freedoms for society as a whole.

5. “It makes it almost a no-brainer to pursue a hard suppression policy.”

As the closing comment on your article, I assume this is your preferred conclusion in regards to the significant lockdown measures we are being forced to endure.  The premise being that the $51.98 billion cost highlighted in the modelling is less than the $62 – $86 billion value of life saved.

The points made above argue that pursuing a hard suppression (elimination) strategy is far from being a ‘no-brainer’.

I might be wrong and would appreciate any feedback or corrections to my comments.

Sanjeev Sabhlok

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